Sun grows faster than competition

A letter from Jim Hassell, Sun MD Australasia

Sun has announced its fourth consecutive quarter of year-on-year revenue growth. Thank you all for helping Sun to achieve this milestone.

For Q2 FY07, Sun reported 7 per cent year-on-year revenue growth.

This was due in part to the success of our UltraSPARC and x64-based servers. In Q2, Sun's systems practice achieved:

• 18 per cent year-on-year growth in UltraSPARC revenues
• 46 per cent year-on-year growth in our x64 servers
• 14 per cent increase in Sun's computer systems products' revenue overall compared to Q2 last year

Not only are our server revenues up, so is our market share.

In Australia and New Zealand, Sun grew its year-on-year total server market share by more than 6 per cent and server sales revenue increased by approximately 50 per cent, according to IDC's 2006 Q4 Asia Pacific (excluding Japan) Server Tracker results.

This is more than six times the revenue growth of Sun's closest competitor and the highest of the top six server vendors.

Solaris and software also shine

The increased acceptance of Solaris 10 continues to be instrumental to Sun's progress.

More than 7 million Solaris 10 licenses have been issued since its release in January 2005. This represents more than the combined shipments of all Red Hat Enterprise Linux, IBM AIC and Hewlett Packard HP-UX releases over the same period.

In fact, IDC has reported that Solaris server revenues grew by 51 per cent in Australia and New Zealand while IBM AIX and HP-UX server revenues shrunk by 3 per cent and 19 per cent respectively.

Increased adoption of Sun's software was a key factor in helping us achieve a 6 per cent year-on-year increase in our total services revenue.

Our biggest news in software in Q2 was the open sourcing of Java under the General Public License (GPL). Already, we have seen a big surge in both developer's sentiment and wide-scaled adoption of the new Java platforms.

What's coming up?

We are in the process of building out the next generation storage product line from Sun's server platforms along with Solaris in our ZFS virtualisation technology.

The first of these products, together with the Sun Fire X4500 hybrid code named Thumper, are available now.

This strategy maximises our return on engineering resources, improves our storage margins, and will deliver customers a common set of innovations with familiar interfaces.

With our recent strategic alliance with Intel, the investment from KKR, and four solid quarters behind us, we anticipate this to be a great year for Sun.

Thank you again for your part in our continued success.

If you're interested in more details on our earnings announcement, please visit our investor relations site.

Jim Hassell
Managing Director
Sun Microsystems Australasia